Schizo Business Model

What is really hurting newspapers and magazines is not discussed all that much: a schizophrenic business model.

Let's use the example of a major magazine. It has investigative reporters working for months on a story, and their research uncovers a major scandal. The magazine at this point has two things: many thousands of dollars invested, and truly proprietary content. What is the natural instinct of the magazine at that point? To tell it to the world as quickly and loudly as possible. Maybe in the old days that was a way to sell more magazines, but in today's world it is just the opposite.

I remember not too long ago, an interesting, important story was published in the New Yorker, a magazine to which I subscribe in print. I first heard about the story when its author went on NPR and spent 20 minutes revealing every last bit of it on the air. That was followed by dozens of news articles and blog posts, a good percentage of which linked to the full story, which was freely available on the New Yorker web site. Ultimately, I was so interested in the story, I clicked through and read the story online, ironically surrounded by ads beseeching me to purchase a print subscription to the New Yorker. Several days after reading the story online, my print copy of the New Yorker arrived, raising a critical question: who's the fool?

This takes us to what I think is the heart of the issue: newspapers and magazines are resisting paywalls only in part because they fear nobody will pay. An equally large but unstated concern is that they will lose their power and influence, something that has become integral to their business model but that is leaving them dangerously exposed in the current media environment.

Being able to get attention on the national stage is the stuff of awards and prizes, and respect from your peers. And a loud public voice gets you political clout and the attention and respect of all sorts of powerful and important people. But this no longer fuels subscription sales, if indeed it ever did. In short, there are tremendous built-in pressures in these businesses to distribute their content fast, furiously and free. Chasing the public spotlight to push your way into the center of the action was economically viable when advertisers were footing all the bills, but those days are gone. There was a time when much of the news media could have it both ways: prestige and profits. Now, it's looking increasingly as if they'll have to choose between the two.